The Chairman, Association of Securities Dealing Houses of Nigeria, Chief Onywechukwu Ezeagu, in this interview speaks on the state of the Nigerian stock market and other sundry issues. Goddy Egene brings the excerpts:
You were quoted recently to have said that despite COVID-19 pandemic, members of Association of Securities Dealing Houses of Nigeria (ASHON) go about their transactions, can you validate this statement?
The pandemic has not taken away the level the market has attained in terms of technology and ability to reach out to customers. The operators have been prepared for a situation where customers are connected online real time and we have been engaging in virtual trading. Remember that in some years past we were all subjected to a rigorous set of minimum operating standards, so this period only served to put our potentials into real test and our members were equal to the task which is evident in the fact that trading was never disrupted by the lockdown.
How will you describe the attitude of investors towards investment on the Nigerian Stock Exchange so far under COVID-19?
It has been mixed in that initially, some investors did not know that the Nigerian Stock Exchange (NSE) was open for business, when we let them know, it was a great relief and they started to patronise the market. It was a pleasant surprise to them and this ignited some positive sentiments towards the market.
What are the topmost concerns of ASHON’s members at this moment and the way forward?
We are concerned about the economy which has been badly affected and the ability of our customers to keep faith. Health concerns of staff and investors cannot be ignored, it is a healthy man that will invest and so we are concerned about the rate of spread and containment of the corona virus. We were equally concerned about the sustainability of our business continuity plan deployment.
What messages should securities dealers be sending to investors at this critical period?
We should be sending messages of hope, the reduction of fear and the need to keep safe by observing the directives of the authorities in handling the pandemic. Also the market is resilient and ready for investors.
Last year, you represented ASHON in some strategic foreign meetings for collaboration and professional practice of your members, any update?
We were in the ASEA Conference at Kasane, Botswana and as a major part of the African Linkage Project, we signed the memorandum of understanding (MoU) of the newly formed African Stockbrokers and Securities Dealers Association (ASSDA). We were also in Abidjan Cote d’Ivoire for the WACMIC conference. All these were efforts to integrate the African markets and create synergies such that Africans can trade at regional and continental levels.
As demutualisation of the Nigerian Stock Exchange is drawing nearer, are there things that ASHON’s members should put in place for seamless transition?
Our members have done most of the things required of us to see the process succeed up to this point. What is required of us now is housekeeping, members are to ensure that when the shares due to them are to be credited that they have updated their account profile with the NSE registrars.
What are the likely effects on Nigeria’s economy, the current downward review of this year’s budget, following global impact of COVID-19 on businesses?
Whatever happens to the budget has a direct consequence on the economy and will be felt in all sectors. The economy will contract; we may see another recession but one can expect a concerted effort by all world economies to pull one another out since the problem is universal. Domestic borrowing may boost the local bourse and loan rescheduling would likely be the order of the day resulting from revenue shortfall of debtors.
Many quoted companies on The Nigerian Stock Exchange have announced their Q 1 results and they are good. But how sustainable?
In every situation, some people will come out unscathed, some of the quoted companies may be able to sustain a good run within the pandemic due to the nature of their business. For instance, we have seen a surge in the use of telecommunications services except that business linkage/multiplier effects could jeopardize the revenue projections. The first quarter results is not likely to be sustained in the subsequent quarters as the impact of the corona virus pandemic continue to negatively affect both the demand and supply side of the economy.
As COVID-19 continues to impact on investment decision, which sectors of the economy are likely going to be least affected and why?
We still believe that primary agriculture and telecommunications will not be greatly affected as much as the tourism and hospitality industries. The reason is that people will be mostly interested in staying alive therefore they need food and so many organizations now rely more on virtual meetings and the reduction of physical contacts will enhance telecom and ICT providers’ revenue. Medical consumables and equipment companies would have boosted revenue.
Is it true that ASHON is supporting Securities and Exchange Commission (SEC) to mobilise funds to support the federal government over COVID-19?
The SEC set up a Capital Market Support Committee on COVID-19 in which one of our prominent members was appointed as chairman. The committee reached out to the association, shared their activity budget and it is fair and proper for us to live up to our responsibilities and stand up to be counted. Note that whatever is to be done will be to the benefit of our people who are also our customers. Many of our members have contributed to the COVID-19 Support Fund.
The current pandemic is fast prompting institutions to review their business model, how will this affect ASHON’s activities, including investor education, seminar and workshop?
We are also reviewing our business model to accommodate the new normal. We have constituted a committee to advise our Council on the effect of the pandemic and part of their terms of reference is to chart a way forward for our business, therefore, it will not be right to preempt the work of the committee at this time.
Any other comments sir?
The pandemic has come to recalibrate the world and redefine humanity. It is important that we all learn to readjust to the dictates of the times by staying safe through following the directives of the experts.
We should keep hope alive, do not give in to fear, help one another, look out for one’s neighbor, change the way we live, work and play to conform to the realities of the pandemic. We should also collaboration rather than competition and this should help all to overcome the new normal. The market needs to be ready to provide funding for both the public (government) and private organisations to fund critical infrastructures.
This is more so when the federal government has now decided as a matter of necessity to revert to the local capital market to fund about N850 billion of its elsewhile borrowing from overseas markets. The consequence is that the local capital market would have to absorb the funding of about N1.59 trillion of the 2020 budget deficit as N744 billion was previously allocated to the domestic capital market funding.